The administrative department consists of the president and an office staff of eight who handle the secretarial , purchasing , and accounting duties . ( Total of nine people .) The following information is available regarding the 2005 actual costs :
It is felt that the level of the office and administrative staff will be adequate for the coming year . It is expected that the following changes will occur in 2006 :
2006 INCOME TAX INFORMATION
The current federal and state income tax rates total 40 %. All taxes for the year will be paid by the end of the year which means that there will be no accrued taxes on December 31 , 2006 .
2006 ACCOUNTS RECEIVABLE INFORMATION
It is expected sales will occur evenly throughout the year and that there will be no cash sales . 75 % of monthly sales will be collected in the month following the sale , and the remaining 25 % will be collected by the end of the second month . No bad debts are anticipated .
2006 ACCOUNTS PAYABLE INFORMATION
This account represents the purchases for raw materials only . It is expected that purchases will be made evenly throughout the year , and that all purchases will be paid for during the month following the purchase .